Everyone on the net is already discussing the situation in more depth than I've got time to do, but I may as well toss in my $0.02 and point out that winning the Palestinian elections may have been one of Hamas' worst moves ever. Now Israel is holding the Palestinian government directly responsible for everything the terror groups do; it doesn't look like the old good-cop/bad-cop routine is going to work anymore, in which the Palestinian government would act like they couldn't really control the terrorists.
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